By Ankur Banerjee SINGAPORE, April 17 (Reuters) - Asian stocks were poised for a second week of strong gains and oil prices were pinned below $100 a barrel with investors hopeful for a near-term
Stocks romp to records, oil plunges on hopes of US-Iran peace deal
Market Reactions to US-Iran Peace Prospects
By Isla Binnie and Alun John
NEW YORK/LONDON, April 17 (Reuters) - Oil prices cratered, Wall Street indexes scaled record highs and U.S. Treasuries surged on Friday, after Iran said the Strait of Hormuz was open for passage during a ceasefire in Lebanon and U.S. President Donald Trump said he expected to reach a deal to end the war soon.
Strait of Hormuz Reopens Amid Ceasefire
Iranian Foreign Minister Abbas Araqchi said on X that passage for all commercial vessels through the strait, a key conduit for global energy flows, was completely open for the remainder of the 10-day truce brokered by the U.S. between Israel and Lebanon that was agreed on Thursday.
Trump told Reuters the U.S. would work with Iran to recover its enriched uranium - part of a key sticking point in negotiations - and bring it to the United States.
Oil Prices Plummet
Benchmark Brent crude futures settled 9% lower at $90.38 per barrel, having hit a session low of $86.09. U.S. crude settled down 11.45% at $83.85 a barrel . Those prices remain above pre-war levels around $70, but are down significantly from late March's highs, which, for Brent, were close to $120 a barrel.
Impact on Energy Markets
Large energy stocks that benefit from high oil prices recovered some earlier losses, but U.S. majors Exxon Mobil and Chevron closed down 3.6% and 2.2% respectively. American Airlines and United Airlines advanced sharply.
Stock Index Set Record Closes
Stocks marched higher, with the Wall Street benchmark S&P 500 and Nasdaq setting their third straight record closes and the Dow Jones Industrial Average marking its highest finish since late February.
Major Index Performance
The Dow rose 1.79%, to 49,447.43, the S&P 500 gained 1.2%, to 7,126.06 and the Nasdaq Composite jumped 1.52%, to 24,468.48.
The small-cap Russell 2000 outperformed large-cap gains and also posted a record closing high.
Sector Highlights
"Energy prices coming down has a bigger impact on small caps because they have tighter margins," said Nick Johnson, chief investment officer at Willis Johnson & Associates, adding, "it's starting to become clear that the U.S. and Iran want to see this behind them."
Netflix provided its own market drama, with shares falling more than 9% after the streaming service delivered a downbeat growth forecast and said chairman and co-founder Reed Hastings was leaving the company.
Bond and Currency Markets Respond
Government Bonds Rally
Optimism that the war might be nearing an end eased concerns about renewed inflation.
Government bonds rallied, with the benchmark U.S. 10-year Treasury yield touching its lowest since mid-March. The yield, which moves inversely to prices, was last seen down 6.5 basis points to 4.246%. The 2-year note, which typically tracks expectations of rate moves from the Federal Reserve, fell 7.8 basis points to 3.7%.
The oil price drop was "driving the whole move," said Tom di Galoma, managing director of global rates trading at Mischler Financial Group.
"Do we actually get a prolonged ceasefire and a strait reopening? I don't know. This seems like it's going to take some time to work itself out. But right now, I think that's what's going on ... It's all the good news coming out of the Gulf,” di Galoma said.
European and US Bond Divergence
Treasuries had held up better than European bonds since the war began because the United States, as a net energy exporter, is relatively insulated against surging energy prices.
Traders pared bets that those price rises would prompt the European Central Bank and Bank of England to raise rates on Friday, supporting German sovereign debt.
Dollar Weakens
The dollar dropped to multi-week lows as the shine came off safe-haven assets. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.02% to 98.19, after dropping to 97.632, its lowest in seven weeks.
"The dollar's weakness is mainly about the market unwinding the geopolitical risk premium," said George Vessey, lead FX and macro strategist at Convera in London.
(Reporting by Isla Binnie in New York and Alun John in London, additional reporting by Sophie Kiderlin, Niket Nishant and Lucy Raitano; Editing by Kirsten Donovan, Elaine Hardcastle, Nick Zieminski, Rod Nickel)
